Gross Profit Calculator

Find gross profit and gross margin from revenue and COGS.

Revenue

Cost of goods sold

Direct cost of the goods you sold.

Results update as you type.

Gross profit

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Gross margin—

How it works

A gross profit calculator strips a business down to its most honest performance figure: the money left after paying for the goods actually sold, before any overhead is counted. You enter total revenue and the cost of goods sold — the direct materials, direct labour and inbound freight tied to producing what you delivered — and the tool returns gross profit in dollars and gross margin as a percentage of sales. Gross profit is the wellspring that must fund every other cost a company carries: rent, salaries, marketing, software, interest and tax all get paid out of it. If gross profit is thin, no amount of cost-cutting elsewhere can rescue the business, because there was never enough spread between price and product cost to begin with. That is why lenders, buyers and operators look at gross margin before almost anything else. The subtract-then-divide method used here mirrors the top of an income statement, where sales sit first and direct costs are removed immediately to reveal the trading profit. Founders use a gross profit calculator to price products, compare suppliers, judge whether a discount is survivable, and track whether margins are holding as they scale. A rising gross margin alongside growing revenue is one of the clearest signs a business model is genuinely working.

Formula

Gross profit = revenue − COGS · Gross margin = gross profit ÷ revenue × 100

Revenue is the total sales value for the period and COGS is the direct cost of producing those specific sales. Subtracting COGS from revenue isolates gross profit, the trading surplus available before overhead. Dividing that surplus by revenue and multiplying by 100 converts it into gross margin, a scale-free percentage. Margin lets you compare a low-priced, high-volume product against a premium one, because it measures the spread rather than the raw dollar amount.

Source:Standard financial (income-statement) accounting

We review all our tools from time to time to ensure accuracy.

Worked example

Revenue:100000Cost of goods sold:60000

Gross profit = $100,000 − $60,000 = $40,000. Gross margin = 40,000 ÷ 100,000 = 40%.

How to use this calculator

1
Enter your values
Enter revenue and cost of goods sold.
2
Adjust the options
Fine-tune any options to match your situation.
3
Read your result
Gross profit updates instantly as you type — no button to press.

Frequently asked questions

What is the difference between gross profit and net profit?

Gross profit subtracts only the direct cost of goods sold from revenue, showing the trading surplus before overhead. Net profit goes much further and removes every operating expense — rent, salaries, marketing, interest and tax — to reveal what the business actually keeps. Gross profit tells you whether your pricing beats your product cost; net profit tells you whether the whole operation makes money once all bills are paid.

What counts as cost of goods sold?

COGS includes only the direct costs of producing the goods or services you sold in the period: raw materials, components, the direct labour that makes the product, and inbound freight. It excludes indirect costs such as head-office salaries, rent, advertising, administrative software and distribution. The rule of thumb is that a cost belongs in COGS if it rises and falls directly with how many units you produce and sell rather than staying fixed each month.

What is a good gross margin?

It varies enormously by industry. Grocery and physical retail often run gross margins of 20 to 40 percent, manufacturing sits in the middle, and software or digital products frequently exceed 80 percent because the cost to serve one more customer is tiny. Rather than chase a universal number, benchmark against direct competitors and against your own trend. A margin that stays stable or climbs as you grow is the signal that pricing power and cost control are both holding.

Can gross profit be negative?

Yes. If the cost of goods sold exceeds the revenue those goods generated, gross profit is negative, and the margin is below zero. This means you are effectively paying customers to take the product — every sale deepens the loss before a single overhead cost is added. Negative gross profit is a red flag that demands an immediate fix: raise prices, cut supplier costs, drop the loss-making line, or rework the product so it can be delivered profitably.

How can I improve my gross margin?

Work both sides of the spread. On price, test increases, reduce unnecessary discounting, and package higher-value bundles that customers happily pay more for. On cost, renegotiate supplier terms, buy in larger runs where it lowers unit cost, cut waste and rework, and shift volume toward your higher-margin products. Even a few points of gross-margin improvement flow straight down toward the bottom line, because the overhead below it barely changes when margin rises.